Investors participating in a defined contribution (“DC”) pension plan with regular pension statements have conventionally been provided performance information regarding investment funds in which they have invested. A typical example is described below.
An employer puts in place a pension plan which enables employees to invest in up to 10 different investment funds. An employee having a pension pot worth £50,000 chooses to invest 25% of his pension pot into the following four funds: U.K. equity, U.S. equity, U.K. bonds, and U.K. real estate. Twelve months later, the employee receives from the pension plan administrator an annual report detailing how each fund into which the employee has invested has performed over the last year, together with benchmark performance figures relating to each of the individual funds based on average sector performance. FIG. 1 shows a typical example of investment performance information provided in a conventional annual performance report. As seen in this FIG. 1, the investment performance information may include data regarding allocation, details of the valuation of funds at the beginning of the period compared with at the end of the period, and details of the 12-month returns as compared to the 12-month benchmark returns. In addition, the report outlines the impact of the performance of each fund on the value of the total pension pot.
While such performance information gives investors some indication of the relative strengths of the various funds offered within the pension plan (e.g., relative to the average sector performance (e.g. an equity benchmark such as the S&P)) the information supplied provides little or no indication of how well they are saving for retirement. Furthermore, the information supplied provides an investor with little or no indication of how their decision to split their investment across the available funds (their asset allocation decision) has impacted the performance of the portfolio. Accordingly, there is a desire to provide investors with a more informative measurement of investment performance.
Among those benefits and improvements that have been disclosed, other objects and advantages of this invention will become apparent from the following description taken in conjunction with the accompanying figures. The figures constitute a part of this specification and include illustrative embodiments of the present invention and illustrate various objects and features thereof.